Marketing creation of customer interest and retention of customers if this can be done at a profit. H&M spends a hefty 4 percent of revenue on marketing as valuable investment. At current sale level, the chain is the largest apparel retailer in Europe. H&M is not Just a store chain; it is a money-making machine. The marketing orientation vs. production orientation Marketing orientation companies focus on customer needs like firms develop products with customers and use market information and intelligence as basis for learning. Marketing orientated companies get close to their customers in order to understand their needs and differences.
Marketing research seem as an investment and welcome organizational change necessary to maintain strategic fit between organization and environment. Rewards risk and Innovation by employees and identify latent market. Based on its understanding of customer, a company develops its marketing mix. Production orientations define themselves through their product. It is the cost focused as economies of scale, based on production capabilities and sale their product aggressively. The case study reveals that H&M Is using marketing mix strategies.
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The marketing mix consists of four major elements: product, price, pronoun and place. However, the criticism of ups approach might be too simplified; it should add up process, packaging and people due to achieve long term relationship and satisfaction. Regarding to the marketing orientation perspective, H&M did massive marketing research, for example, H&M tailoring it is strategy to the US market. In Europe, H&M selling a range of merchandise for the whole family from high street fashion to casual basics. However, US store are focus more on fashion conscious female.
H&M en ‘swear line as a strong seller in Europe, but has not proved popular with the less fashion – conscious American male. It caused a number of outlet have either cut back the selection or eliminated the line. H also has merchandise managers in each country, who talk with customers about the clothes and designers spend time with store managers to find the reason of certain Item In each country have or haven not worked. H tries to associate with customer and building relationship with them. Believes that corporate goals can be achieved through satisfied customers.
Based on the Production orientation perspective, behind the stylish impression of the brand, ‘H&M is run on a shoestring’ says Nathan Cockerel, a retail analyst at credit Issue First Boston in London, ‘They buy as cheaply as possible and keep overheads low. H&M focused on the low cost and rein in cost from their head office and suppliers. Such as cannot fly business class but only in emergencies, taxi or cabs are definitely frowned upon. In order to reduce the cost, Stefan person, chairman of Swedish retailer H&M only allowed a few key employees have cell-phone privileges in sass.
In order to rein in cost and keep the cost down, the company outsourcer all manufacturing to a huge network of 900 garment shops located in 21 most low-wage countries, primarily Bangladesh, China and turkey. ‘They are constantly shifting production to get the best deal,’ says John Diesel, an analyst at Unskilled Securities in Stockholm. In my point of view, H&M is using the marketing mix strategy and treat the marketing orientation as the most important part. Efficiency versus Effectiveness Efficient is concerned with inputs and outputs and produced goods economically.
The benefit is the cost per unit is low, that helps the potential for offering low prices to gain market share, or charging medium to high prices and achieving high profit margin. However, to be successful, firms needs to be efficient and also needs to be effective. Effectiveness means doing the right thing. It implies making product based on customer needs and wants, it also need to cater the customer preference and taste. The link between efficiency and effectiveness shows on the table 1. 1 Ineffective effective Inefficient Goes out of business quickly Survive Efficient Dies slowly
Does well Thrives The link between efficiency and effectiveness will affect the performance. As the table 1. 1 shows, a firm that is both inefficient will go out of business quickly due to the high cost producer of product that customer not willing to purchase. A firm that is efficient and ineffective could last a little longer due to the low cost basis. A firm that is in efficient and effective may survive due to cater the customer preference and making the product that customer needs or wants. A firm which combine the efficient and effectiveness can be leads to optimum business success.
Firms do well and thrive because operating in attractive market, it benefits from making product based on the H&M that is combined the efficiency and effectiveness that leads to optimal success. H&M do well because they are operating in attractive markets and supplying products that consumers want to buy and are benefiting from a low cost base. The three weeks lead times can be the best example of efficiency. H&M’s 21 local production offices have compressed lead times. ‘The time it takes for a garment to travel from design table to store floor – to as little as three weeks.
Only Ezra has a better turnaround, it to shrink lead times to a mere two weeks. Gap operates on nine month cycle. H&M put effort on speed maximizes its ability to produce more hot items during any season and based on the low cost. To keep cost down, the company outsourcer all manufacturing to a huge network of 900 garment shops located in 21 mostly low- wage counties, such as China, Bangladesh and Turkey. If the supplier enhances the cost, H&M will shift production to get the best deal. H&M also has effectiveness by satisfying their customer and making the product that customer wants.
H&M identified their market segment accurately in different countries in order to cater the preference of local customer. For example, In Europe, H&M more like a department store, selling a range of merchandise from high street fashion to casual basics for the whole family, and H&M menswear line is a strong seller in Europe. H&M is smartly tailoring its strategy to the US market, US store are focused on younger, more fashion-conscious females. H&M’s menswear line has not proved popular with the less-fashion-conscious American male. Therefore, a number f US outlets have cut back or eliminated the line.
The essential difference between efficiency and effectiveness are, the former is cost focused and the latter is customer focused. An effective company has ability to attract and retain customers based on the long term relationship and satisfaction. Basis of customer value & satisfaction H Marketing orientated company attempt to create customer value, reduce customer risk and meet customer expectation. Firms attempt to create customer value in order to attract and retain customers. Their aim is to provide superior value to their target customer.
Customer value can be derived from many aspects of what the company delivers to its customer, not Just the basic product but also associated with the relationship between customer and supplier. Customer value = perceive benefits – perceived sacrifice For example, H at the Manhattan flagship: ‘mirrored disco balls hang from the ceiling, and banks of televisions broadcast videos of the body-pierced, belly baring pop princesses of the moment,’ it implies the perceive benefits and enhance the customer value. In another example, H rapidly changing styles and based on the affordable price.
The formula of H is ‘high fashion, low price,’ this implies to add value of fashion on low price. H Treat fashion as perishable product, ‘keep it fresh, and keep it moving. ‘ That means spotting the trends even before the trendiest do, make it to affordable clothes. H noticed lusting after the Dolce corduroy trench coat is getting popular but customer is unwilling to pay $600. At $ 32, H’s version used Lascar than Luke and half of my wardrobe comes from H&M, and it is very good value for money,’ says Emma Mackey, a 19 years old student from London.
Moreover, H commissioning Karl Largely, Stella Mac Carney and Matter Williamson to design the limited edition in order to attract potential customer and retain customers. To contrast with GAP, GAP only focuses on the high quality classic casual, and to compare with Ezra, EZRA has high quality and more expensive fashions. H effort on the speed of maximizes its ability to produce more hot items during any season. The garment to travel from design table to store floor only takes three weeks, it satisfied the customer needs and expectation of the trendy and fashions.
Marketing benefits of using designers H The marketing benefits to H of commissioning Karl Lagged, Stella McCarty and Matthew Williamson to design limited edition clothing ranges are saves on marketing costs, which include sales promotion, advertising, personal selling and public relation. Based on the influences of the well-known and famous designer, Public relation such as newspaper, magazine and other public channels will automatically advertise that H commissioning well known designers without paying a high cost of promotion charge.
Moreover, to commissioning premium signer could consolidate the fashion image of H, it helps attract their target customer and retain customers. This action also enhances the value for money as customer could buy designed clothes with affordable price. H shrewdly reduced the marketing cost and successfully attract and retain customers by using this strategy. Challenges in future of H H in order to keep costs down and rein in cost, H outsource all manufacturing to a huge network of 900 garments shops located in 21 mostly low – wage countries, such as China, Bangladesh and Turkey.
And they are constantly shifting production to et the best deal. Some might criticize H for using low cost suppliers and constantly change them. It may cause the strike in the future and will have the negative affect to their lead times. Secondly, the entrant threat is low due to low cost fashion market; it is much possible to have many potential rivals, such as competitors from Japan like ‘109’ department store, and Korean fashion brands like ‘ Zip’. H should keeping add value on their product and develop the marketing mix , exceeding the value offered by competitors is key to marketing success.
Is the marketing of disposable fashion against social welfare? One of the limitations of the marketing concept concerns it’s too much focused on individual market. Individual’s weights their personal benefit while discount the society impact of their purchase. Marketing concept may ignore social welfare. Therefore, firms should have the marketing ethic and morally correct doing the ‘right’ thing. For example, to keep costs down and rein in cost, H outsource all manufacturing to a huge network of 900 garments shops located in 21 mostly low – wage countries, such as China, Bangladesh and Turkey.
And they are constantly shifting production to get the best them. H as one of the largest fashion company, constantly change the supplier may cause the increase the rate of the unemployment. Secondly, H has got the fast turnaround, the cutting leads times only takes three weeks. Customer only wears the trendy clothes for few times and then buys new pieces with no pressure of affordable price. The equation of H ‘ treat fashion as if it were perishable product; keep it fresh and keep it moving,’ it defiantly against the principle of the World Environment Protection Association.